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  • QA 166
    Question:
    How to promote premium coffee in a price-conscious environment?
    Background:
    How could one efficiently market a premium coffee in a producing country when the main consumer interest is to buy lower priced coffee?
    Asked by:
    Exporter/trader - Colombia
    Answer:

    With real disposable incomes rising in many coffee producing countries (but not all), demand for better quality consumer goods is increasing as well. However coffee will only benefit if its image projects quality and, therefore, satisfaction.

    In many coffee producing countries the emphasis has in the past been on maximizing export earnings from coffee, particularly so when quotas restricted exports in order to maintain certain price levels. Usually, this resulted in the most valuable coffees being exported, leaving any surplus lower qualities for domestic consumption. At the same time low per capita incomes in many producing countries limited demand to lower priced coffee beverages which, as a result of these two factors, were often made from poor quality beans. *

    The International Coffee Organization (ICO - www.ico.org) estimates current total coffee consumption in coffee producing countries at just over 33.3 million 60-kilo bags of which 22.3 million are consumed in Latin America. Brazil, Colombia and Mexico between them account for 19.3 million bags or 86% of this. This points to a relatively strong coffee drinking culture in these three countries… However, in the late 1980's the estimate for these three countries was 11 million bags and all the growth   appears to have taken place in Brazil. Brazil is now the world's second largest consumer of coffee.

    The story behind that strong growth in Brazilian domestic consumption is one of improving the image of coffee generally, including using better quality coffee for the domestic market. This strategy has enabled the coffee industry to capitalise on rising incomes and higher standards of living.

    At the other end of the spectrum, in the United States of America, recent decades have witnessed equally impressive growth in the premium or specialty consumer segment. Excellent marketing strategies, together with better quality coffee, capitalised on a lacklustre image for coffee generally by rekindling interest in coffee as a quality beverage.

    For coffee producing countries wishing to raise both the quantity and quality of domestic consumption the best approach would appear to be a combination of these two success stories: the Brazilian approach that raises both the quality and image of coffee generally, and the US approach that builds on this by demonstrating that premium coffee can provide an exclusive taste experience. **

    In terms of easily accessible resources we would mention that the ICO offers a 'Step-by-step Guide to Promote Coffee Consumption in Producing Countries' that incorporates the experience gained in Brazil and elsewhere (Latin America, Africa and Asia). This can be downloaded from www.ico.org. The Specialty Coffee Association of America (SCAA at www.scaa.org) is an excellent source for information on marketing resources for specialty coffee producers, roasters and retailers, whereas the Coffee Quality Institute (CQI), also in the US at www.coffeeinstitute.org, offers information on developing premium or specialty coffees.

    *  For more on export quotas see section 01.05 of the Guide that deals with the International 
        Coffee Organization.

    ** See section 03.01 of the Guide for more on premium or specialty coffee markets, and section 
         02.07 for more on Brazil.

    Posted 26 September 2007

    Related chapter(s):
    Related Q & A:
    Q&A 036, 048, 086, 165